SAN DIEGO – It was promoted to struggling, mostly Hispanic homeowners as a way to beat foreclosure. But prosecutors say it turned out to be a gigantic scam that tricked 400 property owners into paying fees and rents to a San Diego-based group that did nothing to prevent lenders from taking back their homes.

Police recently arrested four San Diegans and have issued an arrest warrant for a fifth suspect in connection with the foreclosure rescue scheme, prosecutors said Thursday. The suspects face more than 100 felony charges of conspiracy, grand theft and deceitful practices as foreclosure consultants.

Prosecutors estimate that combined losses for victims total hundreds of thousands of dollars.

Mortgage fraud has been a rising concern for law enforcement as the current foreclosure crisis grows. Many schemes prevalent during the easy money lending environment of the housing boom – such as under-the-table cash back at closing or identity theft to buy property – are now coming to light as the homes wind up in foreclosure.

Other schemes are emerging. They target struggling, desperate homeowners who are facing foreclosure but have yet to lose their homes.

“To see this happen is truly, truly reprehensible,” said FBI Special Agent Keith Slotter. “This should be seen as a warning. When individuals who are already facing an extreme financial crisis are preyed upon by the very people from whom they are seeking help, the FBI will aggressively investigate and pursue prosecution.”

Police have arrested William Hutchings, 62, the alleged ringleader, and Xiaoke Li, 43. Two other suspects, Edgar Martinez, 30, and Diego Gil, 38, were arrested on Tuesday while giving a seminar in Carlsbad on the program to more than 50, mostly Hispanic homeowners. Authorities are looking for Shawna Landis, 29, of Oceanside.

According to prosecutors, the scheme worked like this: Homeowners facing foreclosure were told that, for a fee of up to $10,000, they could prevent foreclosure by signing the title of their property over to companies controlled by Hutchins and the group. The companies included Federal Land Grant Co., Land Grant Services and KBS Resources.

Hutchins then allegedly told homeowners he would file a “land grant” or a “land patent” with the U.S. Bureau of Land Management, which gives the land back to the federal government and prevents the bank from taking back the property.

After four years, he allegedly told homeowners, the “statute of limitations” would run out and the lender could no longer collect the debt. Then, the homeowners allegedly were told, they could get the property back debt-free.

In a variation, homeowners allegedly were told that, instead of the $10,000 fee, they would be charged $500. They could remain in the home and rent it back from the Hutchins group-controlled companies that had placed it in the land grant.

The scheme is completely bogus, according to prosecutors, who say there hasn't been a legitimate land grant in the United States since the end of the Mexican-American War in 1848.

“It's a scam,” San Diego District Attorney Bonnie Dumanis said. “It's not going to stop the foreclosure or help (homeowners) in any way.”

The Hutchins group went to elaborate lengths to reassure homeowners who lost homes to foreclosure after paying their fee, including showing up in court at eviction hearings, said Deputy District Attorney Steve Robinson, who is prosecuting the case.

Many of the victims were from San Diego and Riverside counties. The group targeted Hispanics, in part because land leases involving the government are used in Mexico, said Angela Rosenau, deputy state attorney general.

Rosenau said the scam had been going on since 2006, but it began to expand rapidly starting last September.

“With the volume, we knew if we didn't stop it there was going to be a lot more victims,” said Michael Groch, head of the district attorney's economic crimes unit.

Investigators hope to contact more victims, many of whom are difficult to find because they have been evicted. Anyone who signed property over to the suspects or their companies is asked to call a District Attorney's Office hotline: (619) 531-4475.